PUBLIC UTILITIES ADVISORY BOARD AGENDA ITEM
ACTION REQUESTED:
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Receive 2025 Electric Utilities Fund Review
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DEPARTMENT: Electric Utility
SUBMITTED BY: Electric Utility Staff with Finance Staff Input
BOARD/COMMISSION REVIEW:
N/A
PURPOSE:
The purpose of this memorandum is to present the preliminary and unaudited financial results for the Electric Utilities Fund for the fiscal year ending December 31, 2025
BACKGROUND:
The Electric Utilities Fund operated with a total revenue budget of $166.4 million and a total expense budget of $166.8 million for the 2025 fiscal year. Preliminary year-end actuals indicate total revenue of $178.3 million (107.2% of budget) and total expenses of $179.6 million (107.7% of budget).
While the fund was budgeted to operate at a planned deficit of approximately $0.4 million (attributed largely to capital improvement schedules), actual performance resulted in a deficit of approximately $1.3 million.
This deviation is primarily structural rather than operational; substantial deferrals in Capital Outlay significantly increase expenditures ($2.5M for Tollway Substation at the end of 2025).
Please note that the Finance Department is currently in the process of applying the final accruals and conducting a reconciliation to close the Electric Capital Fund. These standard year-end closing activities, which occur prior to the formal audit review, are expected to alter the preliminary results presented in this report.
DISCUSSION:
Revenue Analysis
Total Revenue for the year was $178.3 million against a budget of $166.4 million, resulting in a variance of ($11.9 million) or 107.2% of budget. The revenue variance is largely linked to financing activities rather than core utility collections.
1. Bond Sale Proceeds: The primary driver for the revenue variance was an increase in bond issuance.
○ Budget: $7.5 million
○ Actual: $10.0 million (133.9%)
○ Analysis: Borrowing was likely increased to align with the revised timeline of capital projects.
2. Utility Charges: Core operational revenues demonstrated high stability and predictability.
○ Electric Charges: $159.6 million actual vs. $154.9 million budget (103.1%).
○ Fines, Fees, and Surcharges: $3.5 million actual vs. $6.2 million budget (177.2%).
Expense Analysis
Total Expenses were $179.6 million against a budget of $166.8 million, resulting in a variance of $12.8 million or 107.7% of budget. Expenditures were significantly over budget overall, principally due to increase cost of purchased power.
1. Capital Outlay (Major Variance):
○ Budget: $30.2 million
○ Actual: $28.5 million
○ Performance: 94.3%
○ Analysis: Approximately 5.7% of the capital budget remained unspent, suggesting major Capital Improvement Projects (CIP) were deferred to the subsequent fiscal year.
2. Operational Efficiencies:
○ Purchased Electricity: Costs came in higher than the base cost that was used in the rate study at $114.7 million (112.7% of budget).
○ Purchased Services: Expenses were below budget at $7.6 million (90.6% of budget).
3. Budget Overages:
○ Personnel: Salaries & Wages ended at 98.6% of budget ($16.1 million), and Benefits ended at 96%.
○ Debt Service: Debt service obligations exceeded the budget by roughly $500,000, ending at 125.7%.
○ Interfund Transfers (Out): Transfers out of the fund were even, totaling $1.4 million against a budget of $1.4 million (100%).
○ The 2025 budget for purchased items: excluding the purchased electricity cost, across the Electric Utility Fund was $1.99M however the actual spend was $4.46M. Most of this is related to the Operating Supplies space, where actual ($3.99M), exceeded budget ($1.33M) by $2.66M. This is largely a result of significant overspending in the warehouse account.
Year-Over-Year Comparison
Total revenue increased by 20.1% ($148.6 million in FY24 to $178.6 million in FY25), largely driven by the inclusion of $10.1 million in bond proceeds. Total expenses increased by 14.1% ($157.6 million in FY24 to $179.9 million in FY25).
Key Variances Summary
Cash Position Summary:
|
Operating Reserves (12/31/25) |
$7,740,982 |
|
Electric Fund |
$7,428,136 |
|
Renewable Energy |
$312,419 |
|
Operating Reserve (Days) Target |
30.0 |
RECOMMENDATION:
Staff recommend acceptance of the report.